Explain the Concept of Assignment in Options Trading.
Assignment is the obligation placed on the option writer (seller) to fulfill the terms of the contract when the buyer chooses to exercise their right. For a call option, assignment means the writer must sell the underlying asset at the strike price.
This typically happens when the option is in-the-money at or near expiration, forcing the writer to deliver the asset or pay the cash difference.
Glossar
Assignment
Obligation ⎊ Assignment in options trading refers to the mandatory fulfillment of the contract terms imposed upon the option seller, or writer, when the buyer chooses to exercise their right.
Assignment in Options
Obligation ⎊ Assignment in Options represents the mandatory obligation imposed upon the seller, or writer, of an option contract to fulfill the terms of the agreement when the buyer chooses to exercise their right.
Early Assignment
Assignment ⎊ In the realm of cryptocurrency derivatives and options trading, early assignment denotes the preemptive exercise of an option contract prior to its standard expiration date.